Corporate overview

BMO REP manage assets of €7.1 billion* on behalf of a range of clients. Our portfolio is well diversified across sub-sectors and geographies.

Our sole purpose is to create and manage successful property investment portfolios. We offer a range of property investments and asset management opportunities across a wide range of real estate markets across Europe.

We have been managing property for over 50 years and investors can access our expertise through a range of structures including listed investment companies, open-ended funds, segregated mandates and single asset deals.

· Specialist – a real estate specialist offering entrepreneurial spirit blended with sophisticated structured institutional practices;

· People – highly experienced and well-regarded team maintaining strong relationships with investors, shareholders, industry contacts and occupiers – key to managing this personal asset class;

· Pipelines – extensive network of contacts, local reputation and experience ensure strong access to on and off-market transactions;

·  Active – pro-active management continually reviewing processes, future themes, opportunities and assets to generate value and create sustainable income;

·  Platform – European presence provides opportunity to expand, while delivering returns to investors.

We also believe in investing responsibly and that responsible property investing (RPI) is about managing future risks without compromising performance:

·       Occupier relationship – appealing to the modern occupier;

·       Reduced income risk – greater occupier retention;

·       Preserve capital values – resilient income enhances value;

·       Enhanced property liquidity – attractive investment with sound fundamentals.

*Source: BMO Real Estate Partners as at 30 September 2020.

Sector forecasts

INDUSTRIAL: European industrial and logistics remains in favour with both occupiers and investors. The sector is seeing both rental growth and yield compression, and this likely to persist. Sentiment regarding future investment intentions remains positive across Europe, especially in France and Germany and also for the UK. We expect the sector to out-perform helped by the continued shift to online sales, which favours distribution, and a prolonged period of low borrowing yields. We see last-mile urban logistics as a particular area of opportunity.

OFFICE: The European office markets may well present a mixed picture, reflecting different levels of demand, the extent of supply tightness and ability to respond to changed market conditions, plus the impact brought about by any permanent shift to home-working. The major office hubs and the core districts therein are expected to prove more resilient as conditions normalize, helped by their greater level of amenity, but the nature of the office will change with flexibility, connectivity, energy use and service provision key. We see both occupiers and investors adopting a cautious approach until the future is clearer, regarding both the pandemic and, for the UK, Brexit. The next two years could be ones of transition with, at best, modest rental and capital growth, before performance improves after 2022.

RESIDENTIAL: The residential market has been growing in popularity. Investor sentiment is strongly positive on balance towards established markets such as France, Germany and Spain. In the UK, “build to rent” has become increasingly mainstream, attracting significant investor interest. Investors are also moving beyond BTR to consider all aspects of residential property, including student accommodation and senior housing. We expect this to be a major growth area in the next few years.

RETAIL: Retail stores have suffered dramatic sales declines due to lockdowns, with rent collection rates affected and rents being re-based amid a raft of business insolvencies and an accelerated shift to online retailing. Weakness has spread to the previously resilient prime and luxury sectors. We expect top tier markets to regain their position, once tourism recovers. We also see potential in the supermarket sector, and for areas which can build on community uses and local loyalty. Elsewhere, It will take time to adjust the retail offer in terms of quantity and specification, and to find the true level of pricing.

OTHER: Investors are increasingly placing student accommodation and senior housing in the residential/living category. Healthcare has benefited from the pandemic but concerns over covenant remain. Hotels and leisure, including food and beverage, have been hit hard by lockdowns. We see recovery in due course in these markets, but the timing is dependent on controlling the pandemic and restoring confidence.

Investment principles & strategy

BMO REP’s focus is to create and manage successful property investment portfolios for our clients and properties that work for our occupiers. Our approach is underpinned by our  commitments to:

1. Be the real estate firm that grows the good creating sustainable and productive properties

2. Embrace the challenges of the changing environment  and promote long-term investment horizons

3. Respect the stewardship we have of the  built environment

The systematic and explicit inclusion of ESG factors into investment analysis and investment decision making is a core principle under which we operate. The tangible nature of property assets, with their exposure to physical aspects and significance to policymakers, amplifies the importance of the ESG dimension.

Property markets can be complex. A long-term horizon and an understanding of the core real estate fundamentals within a location are required to be able to create a quality property investment underpinned by sustainable income. 

Key components of the way we invest include:

·  Sourcing expertise – access to stock on and off market
·  Buying well – understanding the micro location and macro-economic drivers of performance
·  Active management – forward looking plans for every asset
·  Key stakeholder engagement – enhanced occupier engagement and institutional governance

Strategic corporate development

BMO REP is BMO Global Asset Management’s direct real estate specialist and a key part of BMO Global Asset Management’s Real Assets platform managing assets across the UK and Europe through diversified and specialist strategies.

BMO GAM has a long track record of responsible overlay having launched the first strategy of its type. Working with BMO REP, there is further focus on enhancing ESG within existing real estate products and addressing systemic issues through impactful products in doing so providing innovative invest- ment solutions.

BMO Financial Group on behalf of BMO Global Asset Management are GIIN members and IFC Principles of Impact Measurement signatories. As a group we are looking to continually evolve through our range of income focused strategies.

Established in 1817, our parent company – BMO Financial Group – is a diversi- fied financial services provider based in North America.

BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services. The Group has $830 billion total assets under management, more than 45,000 employees and offers products and services to over 12 million customers. It has the longest-running dividend pay-out record of any company in Canada, at 189 years. 

COMPLIANCE STATEMENT

© 2021 BMO Real Estate Partners LLP. Registered in England and Wales with num- ber OC338377. Registered Office: 7 Seymour Street, London W1H 7JW. BMO REP Asset Management Plc is authorised and regulated by the Financial Conduct Authority. BMO Real Estate Partners LLP, BMO REP Asset Management Plc and BMO REP Property Management Limited are members of the BMO Financial Group and are subsidiaries of the Bank of Montreal.